Short-seller Muddy Waters takes aim at Chinese social media firm JOYY
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(Reuters) - China's JOYY Inc (NASDAQ: YY) shares dropped 20% on Wednesday after U.S. short-seller Muddy Waters accused the social media platform of being a "multibillion-dollar fraud" and decided to bet against the stock.
"We conclude that YY's component businesses are a fraction of the size it reports, and that the company's reported user metrics, revenues, and cash balances are predominantly fraudulent," Muddy Waters said in a report on its website. [https://bit.ly/3lErXvU]
The comment from the short-seller comes days after Chinese search engine giant Baidu Inc (NASDAQ: BIDU) decided to acquire JOYY's domestic streaming platform YY Live for $3.36 billion in cash.
Muddy Waters said the deal announcement came just as it was preparing to reveal that its year-long investigation shows YY Live is an "ecosystem of mirages" and "about 90% fraudulent".
JOYY did not immediately respond to a request for comment.
The live streaming platform recorded 41.3 million monthly active users, on average, according to its third-quarter earnings report.
Short interest on JOYY stands at 4.6 million, or 5.7% of outstanding shares, as of Oct. 30, according to Refinitiv data.
(Reporting by Ayanti Bera in Bengaluru; Editing by Arun Koyyur)
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